Bitcoin (BTC), the world’s largest cryptocurrency, has surged over 22% in the past two weeks to trade at approximately $63,200, bouncing back from a significant drop to $52,000 on September 6. This marks the highest level BTC has reached in nearly two months. A critical resistance level at $65,200 looms on the horizon.
According to a recent report from digital asset trading platform Bitfinex, this price increase was primarily driven by the Federal Reserve’s decision to cut interest rates, pushing BTC to a new local high of $64,200 on September 20.
Despite the positive momentum, Bitcoin remains just below the crucial resistance level of $65,200, established on August 25. The report indicates that failing to breach this level could confirm a worrying trend that has marked BTC’s price action since its all-time high of $73,666 in March.
Since that peak, Bitcoin has consistently struggled to break previous highs and has formed new local lows, signaling a persistent downtrend. This pattern of lower highs is evident on the daily Bitcoin chart, suggesting the cryptocurrency has been on a downward trajectory since mid-March.
The daily BTC/USDT chart shows Bitcoin’s price downtrend and volatility over the past months, characterized by a sustained decrease since the March peak. Further volatility, spurred by macroeconomic concerns, triggered another crash on August 5, plunging BTC to its lowest level in six months – down to $49,000 from the $70,000 level it had traded at since late July.
Recent Bitcoin gains have raised notable concerns. Bitfinex highlights the divergence between BTC’s price gains and open interest in futures markets. As BTC rose, open interest increased even faster, reaching $19.43 billion from $18.93 billion on August 25, while Bitcoin’s price stayed around $1,000 below its local high.
This disparity suggests that much of the recent price movement may be driven by speculative trading in futures and perpetual contracts rather than strong demand in the spot market. Earlier this month, Bitfinex observed that Bitcoin’s rise to around $62,000 was largely fueled by robust spot market buying, contrasting sharply with the current situation.
While this trend in open interest might suggest increased speculative interest in Bitcoin, it does not directly imply bearishness. The report states that open interest is not a definitive measure of leverage in the market; it simply reflects the total value of outstanding contracts.
The renewed speculative interest could be beneficial, according to the report, as traders return from summer breaks and reassess their positions following the rate cut. However, Bitfinex cautions that without clearer signs of sustained bullish momentum, market participants should remain wary.
